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Migration, trade and unemployment

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  • Heid, Benedikt
  • Larch, Mario

Abstract

A source of anxiety of policy makers and the public in general is the detrimental impact of trade and immigration on unemployment. The transitory restrictions for worker migration after the EU enlargements of 2004 and 2007 exemplify the supposed negative effect of immigration on labor markets. This paper aims to identify the effects of immigration alongside trade on unemployment controlling for the high correlation between immigration and goods flows in order to prevent an omitted variable bias. The authors use data from 24 OECD countries over the period from 1997 to 2007 and employ instrumental variables fixed effects and dynamic panel estimators in order to account for unobserved heterogeneity as well as the potential endogeneity of migration flows and the high persistence of unemployment. We find no significant effect of immigration on unemployment on average.

Suggested Citation

  • Heid, Benedikt & Larch, Mario, 2012. "Migration, trade and unemployment," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-40.
    • Handle: RePEc:zbw:ifweej:20124
    DOI: 10.5018/economics-ejournal.ja.2012-4
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    2. Antonio Mihi-Ramírez, 2016. "Trends in the International Academic Migration: A Case of Spain," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 4(1), pages 113-128.
    3. Alexandra M. Espinosa & Ignacio Díaz-Emparanza, 2021. "The Long-term Relationship Between International Labour Migration and Unemployment in Spain," Journal of International Migration and Integration, Springer, vol. 22(1), pages 145-166, March.
    4. Alamá-Sabater, Luisa & Heid, Benedikt & Jiménez-Fernández, Eduardo & Márquez-Ramos, Laura, 2016. "What drives interdependence of FDI among host countries? The role of geographic proximity and similarity in public debt," Economic Modelling, Elsevier, vol. 58(C), pages 466-474.
    5. Elena-Maria PRADA & Monica ROMAN, 2014. "Migration And Social Protection Expenditures: Empirical Evidence From The Eu Countries," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 3(2), pages 33-44, DECEMBER.
    6. Liliana Harding & Mihaela Neamţu, 2018. "A Dynamic Model of Unemployment with Migration and Delayed Policy Intervention," Computational Economics, Springer;Society for Computational Economics, vol. 51(3), pages 427-462, March.
    7. Hans-Georg Petersen & Alexander Martin Wiegelmann, 2013. "Risk Taking, Principal Agent Problems And Breakdown Of Corporate Social Responsibility (Csr): How To Reestablish Safe-Assets And Capital Funding For Social Security?," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(2), pages 7-30, June.
    8. Yasir Khan & Taimoor Hassan & Wang Ming Yi & Rahimullah Gulzar, 2018. "A Comparative Analysis Based on Economic Factors of Students Emigration from South Asia," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 5(2), pages 201-208.
    9. Heid, Benedikt & Larch, Mario, 2016. "Gravity with unemployment," Journal of International Economics, Elsevier, vol. 101(C), pages 70-85.
    10. Ayesha Siddiqa & Tariq Hussain & Muhammad Qasim & M. Imran Javed, 2018. "The Impact of Globalization on Unemployment and Economic Growth: Panel Data Analysis for Developing Countries," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(3), pages 122-131, September.
    11. Heid, Benedikt, 2014. "Preferential Trade Agreements, Unemployment, and the Informal Sector," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100376, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    migration; unemployment; international trade; fixed effects instrumental variable panel estimators; dynamic panel estimators;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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